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What is a franchise Contract ?

Home > French Business Law | Published 2010-10-06

Our French law firm located in the heart of Paris is highly competitive and experienced in the field of Business & Contract Law. Our clients belong to the top international companies and seek our expertise in any kind of contract issue. Among the related legal issues, the topic of franchise contracts is a “classic” in the world of legal practices.

A franchise contract is an agreement between two independent companies, the franchiser and the franchisee, by which the franchisee offers to its clients the sale of the goods or services of the franchiser.

The franchiser transfers to the franchisee his trademarks, copyrights, trade dress, technologies, know-how and technical assistance, and in return the franchisee pays royalties to the franchiser. The franchisee must also cover all investments necessary for the continuity and expansion of its business.


Foreign and multinational companies wishing to enter the French and European market without incurring substantial costs or obligations.


  • A quick development of a franchiser’s trademarks and good-will on the French and European territory by expending minimum costs and responsibilities.
  • Cut down on costs of publicity in the territory.
  • Obtaining a competitive edge by creating a large number of franchising contracts.
  • Controlling and managing all franchising activities.


  • The franchising contract may be qualified as an employment contract or as a proxy or exclusive representation contract.
  • The choice of a franchiser can be abolished by the court if it is discriminatory.
  • A franchisee may transfer the franchise to any other company without prior authorization of franchiser.
  • Negotiating royalty prices and their means of payment, determining the terms of use of franchiser’s Intellectual Property rights, know-how and technical assistance, as well as defining publicity investments, level of service and the territory and way of use of the franchise within France and the European community, are submitted to particular French and European laws as well as market practice.
  • Any exclusivity or quasi exclusivity franchising contracts can be cancelled by the court if the franchisee is not informed by the franchiser of the scope of the franchiser’s business in a manner conform to French particular legal procedures, or if the franchise is not limited in time. Furthermore, ending such contracts should be done in a timely manner according to specific and applicable French and European rules and procedures.
  • The clients of the franchisee can be qualified as its clients and not as those of the franchiser, thus preventing the latter from freely transferring the franchise to a different franchisee.


  • Careful drafting franchising contracts taking into account all aspects of the commercial context and the aims of the franchiser.
  • Application of French and European laws and regulations in the field of business, distribution and competition law; methods that our bilingual French Lawyers have mastered.

This article is available online for public information purposes. It is updated regularly, as needed. Due to the constant evolution of the laws and the legal system, we cannot guarantee that the information in this article is still applicable. We invite you to contact us with any legal questions or concerns you have regarding this topic at +33 1 56 79 11 00. In no way can this firm be held liable for articles that contain inaccuracies or are now out of date.

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